With an increasing focus on transparency and combating financial crimes, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has introduced the Beneficial Ownership Information Report (BOIR) requirements for many U.S. business entities. The BOIR requirement mandates entities to disclose individuals with significant ownership or control. Here’s everything you need to know about BOIR deadlines, penalties, exemptions, and compliance tips to avoid non-compliance.

What is BOIR?

The Beneficial Ownership Information Report (BOIR) is a requirement designed to improve transparency about individuals with significant control or ownership in entities registered in the U.S. The rule is part of the Corporate Transparency Act (CTA) and aims to curb illicit activities such as money laundering, tax evasion, and fraud by ensuring accurate reporting of ownership details.

BOIR Filing Deadlines

Understanding the deadlines for BOIR submission is essential to ensure compliance and avoid penalties.

1. Initial Filing Deadlines:

• Existing Entities: Companies, limited liability companies (LLCs), and other applicable entities formed or registered before January 1, 2024, must submit their BOIR by January 1, 2025.
• New Entities: For entities formed or registered on or after January 1, 2024, the BOIR must be filed within 30 calendar days of formation or registration.

1. Updating Information:

• Any changes in beneficial ownership, such as a change in controlling persons or ownership levels, must be reported within 30 days of the change. This applies to ownership changes, changes in key control personnel, or any corrections to previously reported information.

Penalties for Non-Compliance

Failure to comply with BOIR requirements can result in severe financial and legal penalties. FinCEN has introduced these penalties to encourage accurate and timely reporting.

1. Civil Penalties:

• Entities that fail to file their BOIR by the deadline, or do not update information within the required timeframe, may face civil penalties of up to $500 per day for each day the violation continues.

1. Criminal Penalties:

• Willful non-compliance with BOIR requirements can lead to criminal penalties, including fines of up to $10,000 and/or imprisonment of up to two years.

1. Exceptions for Reasonable Cause:

• FinCEN may waive penalties if the entity can demonstrate that non-compliance was due to reasonable cause and not due to willful neglect. However, entities must still take steps to submit or correct information as soon as possible to mitigate penalties.

Exemptions from BOIR Filing

Certain entities are exempt from the BOIR requirement based on the nature of their business, regulatory oversight, or size. Here are some key exemptions:

1. Publicly Traded Companies:

• Companies listed on major U.S. stock exchanges are typically exempt because they already comply with stringent Securities and Exchange Commission (SEC) reporting requirements.

1. Regulated Entities:

• Financial institutions, insurance companies, and registered investment companies are generally exempt because they fall under separate regulatory oversight.

1. Inactive Entities:

• Inactive entities not engaged in business activities and meeting specific criteria (e.g., no assets, no ownership changes) may be exempt from BOIR requirements.

1. Nonprofits:

• Certain nonprofits, especially those with a tax-exempt status under the IRS, are also generally exempt from BOIR filing.

1. Small Entities with Limited Activity:

• Entities that have fewer than 20 full-time employees, less than $5 million in gross receipts or sales, and operate exclusively in the U.S. may qualify for an exemption.

1. Other Exempt Entities:

• Many government-related organizations, subsidiaries of exempt entities, and entities registered as public accounting firms are also exempt from BOIR requirements.

It’s essential to verify exemption status directly with FinCEN or a legal advisor, as exemptions are narrowly defined.

• Full Legal Name
• Date of Birth
• Residential Address
• Identification Number (such as a driver’s license or passport number)
• Scanned Copy of Identification Document

Entities must ensure the information is accurate and complete, as incorrect information could lead to penalties or require resubmission.

How to File BOIR

The BOIR submission process involves creating an account on FinCEN’s online reporting portal, completing the required information for each beneficial owner, and submitting supporting identification documents. Entities will receive a confirmation email after submission, which should be kept for records and potential audit verification.

Tips for BOIR Compliance

To avoid penalties and ensure accurate reporting, follow these compliance tips:

1. Start Early:

• Preparing for BOIR filing early can help you gather all required documents and confirm beneficial ownership details well before the deadline.

1.  Verify Beneficial Owners:

• Review ownership and control roles to ensure all beneficial owners are accurately identified. Some roles may require additional review, especially if there are multiple layers of ownership.

1. Seek Professional Assistance:

• If there’s any uncertainty about BOIR requirements, it’s advisable to consult with a legal or financial professional to confirm your filing obligations and deadlines.

1. Stay Updated on Changes:

• BOIR requirements are relatively new, and changes or clarifications may be released periodically. Monitoring updates from FinCEN or consulting with professionals can help ensure compliance with the latest rules.

Final Thoughts

The BOIR requirement is part of a broader movement toward corporate transparency in the U.S. While the process may seem complex, taking proactive steps now can prevent significant penalties in the future. By understanding deadlines, identifying exemptions, and accurately reporting ownership information, entities can meet BOIR requirements while minimizing compliance risks.

For additional details and specific guidance on BOIR, consult FinCEN’s official resources or seek professional advice to ensure all compliance requirements are met on time.As always, this is only a rough guide and you should check with your accountant to see if you are required to file.